Trusts are a major form of that enables collaborations, especially economic transactions, forming a cornerstone of human civilization. As billions of people are already connected to the Internet, physical limits to cooperation have been majorly removed. However, traditional interpersonal trust can not scale with the Internet. It struggles to expand beyond family ties, long-accumulated reputations, and personal relationships formed over time. Trust has become a bottleneck for human civilization in the Internet age. social capital For many years, blockchains have been dubbed “trust machines”. Yet, we haven’t explored what type of trust is produced by blockchain and what raw materials are used for its production. Some researchers stated that the product of blockchain is , a quite intuitive view: blockchain produces blockspace, while users of on-chain applications pay gas to consume them. Even though virtual machines make blockspace programmable, blockspace is always bound to a specific virtual machine and can only be utilized by applications within the same chain. IMO, blockspace is a standardized packaging of a more general product, similar to how bottled water is a standardized packaging of water. This more general product can be called decentralized trust. blockspace Compared with trust, decentralized trust is more like belief. Belief is a meta form of trust, an endorsement of an abstract idea, and with appropriate guidance, can be transformed into trust among people who hold the same beliefs, thus fostering cooperation. Perhaps one day, we will find a better name than decentralized trust. Decentralized trust has many similarities with electricity: both are produced in the form of currency and have a wide range of uses, yet are difficult to store. The relationship between blockspace and decentralized trust is like direct current (DC) and electricity. DC is an easily usable form of electricity, and many consumer-grade appliances are driven by it. Speaking of the analogy between decentralized trust and electricity, let’s revisit the early history of electricity. Just a few years after the invention of electric light, the great Thomas Edison built the first DC power station on Pearl Street in the southeastern corner of Manhattan. Because of DC’s limited transmission distance, the power station could only serve customers within a radius of less than a mile. For users, the service they used was not electricity, but lighting, the only use case of electricity at the time. The rest of the story is well-known to almost anyone in the tech industry, Nikola Tesla, nobody at the time, invented the AC generator. AC could be transmitted over long distances. Besides lighting up bulbs, AC could also efficiently drive electric motors, thus opening up unlimited possibilities for the application of electricity. Because of these advantages, AC gradually became the main form of electricity and propelled human society into the electrical era. Today, electricity is ubiquitous in our lives. The advent of made decentralized trust arrive at its AC moment. Just as AC ushered in the age of electricity, restaking will drive human society into the era of decentralized trust. restaking If you are not yet familiar with restaking, you risk missing out on the most significant innovation in the Web3 field. Please familiarize yourself with restaking through the articles and interviews by , inventor of the restaking concept and the founder of , before continuing with this text.) Sreeram Kannan Eigenlayer Why restaking is so important for decentralized trust? Firstly, through restaking, decentralized trust can be easily transmitted over the boundaries of consensus protocols. It’s worth noting that the sharing of decentralized trust is not an invention from restaking but an exploration result of shared security. As we all know, scalability has been the core technical theme in the blockchain field in recent years. A very direct approach to scalability is the multi-chain network, which distributes applications to run on dedicated blockchains, aka appchains, thereby bypassing the capacity limit of a single chain. Meanwhile, multiple chains are connected to a network through cross-chain protocols, allowing for the exchange of assets and data between applications. However, security would linearly decrease if a single chain is simply divided into multiple chains. Therefore, researchers of multi-chain networks have been for years exploring shared security: sharing a single big source of decentralized trust between multiple blockchains. The first multi-chain network which proposed and realized shared security was . With the Polkadot relay chain at its core, shared security is achieved by dispatching relay chain validator groups to appchains (parachains in Polkadot terms). Parachains must use a unified virtual machine: Substrate runtime to take advantage of shared security. Parachains generate blocks individually, which are then finalized by the relay chain together with blocks from other parachains. As you can see, Polkadot has achieved shared security among blockchains under a unified consensus protocol. Polkadot Currently, is launching its first replicated security consumer chain: . Replicated security is the first version of shared security that the Cosmos community has long explored. All provider chain validators become validators of the consumer chain and run nodes of the consumer chain. Updates on the validator set are synchronized from the provider chain to the consumer chain via . Validators receive incentives from the consumer chain. If validators of the consumer chain behave maliciously (e.g., double-signs a block), proof of their malfeasance will be submitted to the provider chain through IBC, which invokes slashing on their staked assets on the provider chain. A major advancement of Cosmos shared security is that it transcends the boundaries of consensus protocols; that is to say, provider chains and consumer chains have independent consensus protocols. Cosmos Neutron the Inter-Blockchain Communication (IBC) protocol Though is not well-known as Polkadot and Cosmos, it is also one of the pioneers in exploring shared security. The core of Octopus Network is Octopus Relay which is not a chain itself but a set of smart contracts on the NEAR blockchain. All PoS operations of Octopus appchains take place on Octopus Relay, then are synchronized to the appchains via cross-chain messages. Meanwhile, all rewards and penalties of appchains are gathered to Octopus Relay and then executed on the NEAR blockchain. Since the mainnet launch in October 2021, Octopus has already achieved shared security, crossing the boundaries of consensus protocols. Octopus Network Although sharing security between blockchains existed before restaking, restaking greatly extends shared security supply, turning PoS public chains into huge security pools or decentralized trust dynamos. Based on current staking rates and the price of Ether, Ethereum can provide $35 billion worth of decentralized trust, akin to connecting the Niagara Falls hydropower station to the electricity grid. Inspired by Eigenlayer, Octopus Network has decided to use for its appchains, thereby greatly expanding the supply in its shared security market. $NEAR restaking to replace $OCT Staking as the security source More importantly, restaking can empower any system by decentralized trust, not limited to blockchains. For example, optimistic verified cross-chain bridges wait a challenging period before using the root of trust (usually block headers) to verify cross-chain messages. To prevent potential DoS plus block stuffing attacks, the challenge period usually lasts several hours or even several days, significantly increasing cross-chain transaction latency. If there is a group of witnesses based on restaking providing signed endorsements for the root of trust, they can be put into use whenever the economic value of accumulated endorsements(slashable asset) exceeds the economic value of the cross-chain transactions. By introducing restaking-based witnesses, cross-chain transaction delay can be decreased from several hours or days to a few seconds. Compared with blockspace, restaking is a universal form of decentralized trust, which open up unlimited possibilities for decentralized trust. Internet platforms sit at the centerpiece of Web 2.0 to facilitate collaboration. In Web 3.0, decentralized trust-driven cryptonetworks will replace centralized platforms. Providing the cryptonetwork is backed by enough decentralized trust, collaborators don’t need to trust each other or the operators of the cryptonetwork. When collaboration is successfully completed, the cryptonetwork captures a small portion of the economic surplus created by the collaboration and distributes it to its operators. Operators are providers of decentralized trust who participate in the operation of the cryptonetwork in a permissionless and voluntary way. They must follow the rules of the cryptonetwork; otherwise, severe economic penalties will be upon them. I believe that most internet-based economic collaborations can be achieved like this, breaking through the traditional trust bottleneck while avoiding control from centralized platforms. With the boost of restaking, decentralized trust will be everywhere! After discussing the output of trust machines, let’s look at the input. For Proof of Work blockchains, they produce decentralized trust by inputting computational power, aka chips + electricity, literally transforming into social capital. physical capital From the input and output perspective, Proof of Stake blockchains look strange. In most cases, the staking asset is both the input and output of the blockchain, so there should exist a self-reference. Take Ethereum as an example. As Ethereum carries more and more transactions and earns growing , the intrinsic value of Ether increases with its embedded cash flow( ). The rise in Ether price allows Ethereum to produce more decentralized trust, enhancing its ability to capture more protocol revenue. The economic cycle of Ethereum is self-referential, but every link in the cycle is based on logic and rational expectations. protocol revenue DCF The blockchain narrative is like others in human society: religions, nations, and currencies all originate from the common imagination of Homo sapiens. Yuval Noah Harari points out in his masterpiece “Sapiens: A Brief History of Humankind” that common imagination is the very reason that Homo sapiens stood out in the evolutionary competition. As a rationalist, I am happy to see rational-based common imaginations gradually replacing irrational-based ones and playing an increasingly important role in the development of civilization. PoS blockchains seem like perpetual motion machines, capable of continuously producing social capital from thin air. But in the long run, the common imagination will inevitably collapse if PoS blockchains cannot effectively capture protocol revenue (please be noticed: staking income is not protocol revenue, but cost!). When the protocol revenue can’t support the valuation of the native assets, prices fall, and blockchain security decreases, further weakening the blockchain’s ability to capture value, a vicious cycle. Restaking will serve as a multiplier for Ethereum’s protocol revenue, helping Ether to internalize protocol revenue from hundreds if not thousands of decentralized systems besides the Ethereum blockchain. For other PoS blockchain communities, ignoring restaking equals ignoring the opportunity to step into a positive feedback loop, which is the only way to survive in public chain competition. By , Founder of Octopus Network. Louis Liu Also published . here

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Restaking: the Only Way to Survive in Public Chain

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Restaking: the Only Way to Survive in Public Chain

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